It was the 1980s, I was drifting in and out of low-paid jobs, and near constantly broke. When the cash machine wouldn’t shell out any more, when the credit card was maxed out, my last resort was a shabby exchange bureau near Oxford Circus. They would accept me writing a cheque for £50 with a cheque guarantee card (remember them?). We both knew it would bounce. But the guarantee meant he got his £50, plus a fee, and I got my emergency £50. The consequences would come later.

This was before Wonga. If it had been around, maybe (OK, probably) I would have used them. The cost of bounced cheques - a huge earner for the “respectable” banks - can work out even higher than a short-term loan, even at 5,800%. It’s telling that Wonga’s biggest customers were always 20- to 35-year-old males. A former colleague, James Ball, wrote a searingly honest account of how he had used it. Yes, he said, they’re the perfect pin-up villain – but also that they “helped me, and doubtless helped plenty of other people”.

But before any of us feel the slightest sympathy for Wonga, always remember the story of Kane Sparham-Price, who at just 18 years old killed himself on the same day that Wonga cleared out his bank account.

The question raised by many is that, with Wonga off the scene, where are people supposed to go for emergency short-term cash? After all, at its peak Wonga was used by as many as 1 million people.

Wonga collapses into administration

Read more

But the question itself is false. Wonga’s jolly TV puppet adverts flogging the loans went a long way to create the demand, not just satisfy it. It made borrowing online easy, with cash available at any time, virtually instantaneously, with barely any credible checks on the borrower. Would I have borrowed larger amounts, and more frequently, if I could have done it from home rather than hang around a dodgy bureau in a back street off Oxford Circus? Almost certainly.

Some figures from debt charity StepChange are instructive. It says that in 2013, when Wonga was at its peak, 23.4% of its clients had been tipped into financial disaster through high-cost, short-term credit debts. By 2017 – after financial regulators had belatedly acted to cap interest rates and fees – the number had fallen to 16.8% of its clients.

There’s an uncomfortable truth here. Humans enjoy instant gratification. And we’ve created through the internet ways to deliver that gratification faster than ever before. We’re doing it with gambling as well. The flood of late night gambling adverts that pollute every commercial TV station fosters the same sort of “demand” that Wonga created.

If payday lender Wonga collapses what will it mean for customers?

Read more

Yes, the rise of Wonga was also about the financial crash, unemployment, job insecurity, zero-hour contracts, austerity and the other ills of 21st century life. But they won’t disappear if Wonga goes.

Our error has been to make borrowing too easy. Every Anglo-Saxon economy has now sunk into levels of debt unimaginable just a few decades ago. One acquaintance, moaning about her debt (overdrawn within days of her salary cheque going in), laid bare her finances to me. The shock was the £350 a month going to a car finance company for a dazzling new car.

Why on earth had a 23-year-old on a low income taken out such an absurd commitment? It was just too easy.

When I had a small debt problem in the 1980s, Wonga would not have been the solution. My small debt problem would just have turned into a big debt problem.

The real lesson from Wonga is that, actually, regulation works. It was laid low by intervention to cap rates and fees. So when people say what are we going to do to replace Wonga, the answer should be: as little as possible.